The Old Shell Game

The Old Shell Game

By (Guest Contributor) Pink Panther

When somebody named ‘John Doe’ accessed the computers of the Panamanian law firm Mossack Fonseca in early 2015 the hacker began to pass on the estimated 11.5 million confidential documents that had been obtained to the German newspaper Süddeutsches Zeitung. On April 1st, 2016, Mossack Fonseca announced their computers had been hacked. Two days later these documents were released to hundreds of journalists around the world. They were immediately dubbed the Panama Papers.
What the Panama Papers detailed was the operations of around 214,000 offshore companies. While offshore companies, in themselves, are not illegal they revealed how many of these companies shell companies that hid a lot of seedy activities were.

Before continuing it’s important to explain what a shell company is. Shell companies are basically companies in name only which usually have only the absolute minimum number of people required for a company to be registered. They are usually registered in countries and territories where tax is either very low or non-existent.

They are also most often registered in countries where the laws about money laundering and other illegal financial transactions are either poor or absent or where financial transactions are treated as strictly confidential.

This is the reason why so many of these businesses are registered in places like the British Virgin Islands, the Cayman Islands and Hong Kong. Among many of the things these shell companies were used for was drug trafficking, fraud, money laundering and tax evasion.

What has shocked a lot of people has been the number of current and former political leaders, their families and associates that have been connected to these companies including members of the elite from just about every country in the alphabet from Azerbaijan to Zambia.
In addition, many of the people whose affairs were dealt with by this law firm included sports stars and sports administrators, including those involved with the scandal and corruption riddled International Federation of Association Football (FIFA) and Union of European Football Associations (UEFA).

The Panama Papers additionally revealed that Mossack Fonseca also dealt with many clients who were subject to international sanctions, particularly from North Korea and Syria. Many illegal transactions were carried out through companies managed by this company in open defiance of international laws and sanctions, including the supply of materials used to develop North Korea’s nuclear programme and armaments industry.

Not even celebrities have kept their hands clean. Mossack Fonseca had also handled the finances of many top Bollywood and Latin American celebrities and the internationally famous actor Jackie Chan.

As the revelations from the Panama Papers became available to the general public, Icelandic Prime Minister Sigmundur Davið Gunnlaugsson was forced to resign after a protest involving over 20,000 people marched on parliament. (To put this in context that would be the equivalent of a million people marching on Parliament in London.)

As the result of the Panama Papers there has been an immediate reaction from over forty countries that were named in these documents. In some, the people and businesses implicated by these documents denied or tried to play down the allegations but others have launched inquiries into the business transactions of those individuals and/or businesses named. One of those nations named is New Zealand.
Aotearoa has been identified as a soft spot for money laundering and other illegal transactions because of the tendency of people to assume that New Zealand is not important on the international financial scene.
Surprisingly, very few Americans have been implicated thus far but this is not likely to last and the Süddeutsches Zeitung has announced that more details are to follow.

What is most surprising about the Panama Papers detailing the activities of offshore and shell companies and the law firm that has helped political and other elites to commit fraud, avoid tax, traffic drugs and so on, is that nothing that has been revealed is new. It has been common knowledge that this has been standard practice for many decades. If there is anything that does stand out it is the truly ubiquitous nature of these practices and the range of people involved in them. The list of individuals named is a roll-call of the world’s elites in politics, sports and business. Many of these people are ones who are already well known as scumbags but many others have come from countries that we would not automatically associate with tax evasion and fraud like Iceland.

As anarchists we have no delusions about political elites. Just because a person lives in a country like Iceland or Spain it doesn’t mean the political and other elites that lord over them is any more accountable or less corrupted by power than more famously shady places. It has become common for many to assume that widespread corruption is the preserve of economically underdeveloped nations and/or places with explicitly authoritarian regimes. Thus, when it is revealed that corruption exists in countries supposedly as ‘nice’ as Iceland, it comes as quite a shock.
But why should such revelations be such a shock?

It may be a cliché but it is also true that power corrupts and absolute power corrupts absolutely. The hacked documents from Mossack Fonseca has merely confirmed this basic principle. As soon as people get a whiff of power and influence they will often milk it for all that is worth. The scale and level of participation may differ relative to others but New Zealand is not immune to this. At the grassroots level many have accepted cronyism and nepotism as an essential part of doing business. “So-and-so can get you this and that at mates rates” and “I have a cousin who can put in a word for you at his firm etc.” but we tend to shy away from using the word “corruption” to describe this. However, the Panama Papers have gone further up the food chain and stated that a number of the offshore and shell companies used by the elites to evade tax and other nefarious financial transactions have been registered here. As yet nobody here has been named.

For the most part, what is most telling about the Panama Papers isn’t what they state. It’s no secret that all sorts of dirty dealings have been done through offshore and shell companies. It’s been the reaction to what has been revealed. While investigations have been launched in some countries the reaction of many of those implicated in shady dealings through Mossack Fonseca has been to either deny them or to claim that no laws have been broken and that it’s just business as normal.
Maryam Nawaz, the daughter of Pakistani Prime Minister Nawaz Sharif, denied all such charges via her official Twitter account in a series of tweets, saying:
As stated earlier, I do NOT own any company/property abroad. My brother has made me a trustee in one of his corporations which only entitles me to distribute assets to my brother Hussain’s family/children if needed. Nothing more than what my brother has already explained. The info provided by leaks does NOT say any wrongdoing involved. Distortion is wilful that a couple of media channels using to settle scores.
Notice a theme we often hear when the ruling elites and their families are caught out? They blame the media of “settling scores”. They deny any wrongdoing and justify what they are doing as “business as usual”.

The problem is that people at the bottom end of society are fed up with hearing this rubbish. Years of wage freezes and cuts, job losses and austerity measures such as tax hikes for low to middle income earners has hit most people hard. The one thing they don’t want to hear is a bunch of money laundering cheats and fraudsters whose incomes are more often than not funded by taxpayers, telling them that it’s just “business as usual”. This has been one of the reasons why the leaked documents has triggered so many investigations in so many countries.
Although it is unlikely to result in anything of substance happening – the elites will simply change the laws of the land to suit themselves – they have to be seen to be doing something so there will be the odd sacrificial lamb handed over to the masses. Hence the why Sigmundur Davið Gunnlaugsson was forced to step down.

While these sacrifices will be celebrated it will not result in changes of any substance as money has always talked louder than the will of the people under the economic system we live under. Once the uproar has died down, token laws have been passed and a few people thrown in jail to pacify the masses, things will return to normal. That is, offshore and shell companies will still continue to be administered by law firms that specialise in helping them to launder money, get away with fraud, traffic drugs and evade taxes.

For the moment we can watch the entertaining spectacle of the elite throwing one of their own to the wolves but will things really change? Without the active participation by millions of ‘ordinary’ people in a transnational movement to fundamentally overturn this system, the answer is no.